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Amazon is planning to cut more than 18,000 jobs as part of a reduction that began in late 2022, and is extending into the new year.
The number of layoffs, which was shared in a memo posted publicly by the company, represents additional eliminated positions beyond what was initially shared in 2022. In November, the reported total of the layoff was 10,000 positions, but Jassy wrote at the time that reviews were still ongoing.
On Wednesday, Jassy wrote that the review “has been more difficult given the uncertain economy and that we’ve hired rapidly over the last several years.”
“These changes will help us pursue our long-term opportunities with a stronger cost structure; however, I’m also optimistic that we’ll be inventive, resourceful, and scrappy in this time when we’re not hiring expansively and eliminating some roles,” Jassy wrote. “Companies that last a long time go through different phases. They’re not in heavy people expansion mode every year.”
The layoffs will mostly affect Amazon Stores, which encompasses ecommerce and physical retail, as well as the division known as People Experience and Technology, which encompasses people ops and culture functions.
Jassy wrote that the layoffs will begin on January 18. The company had planned to communicate all of this following communication with employees, but news of the additional layoffs was leaked to the Wall Street Journal, prompting the official word to be delivered sooner.
The cuts come as Amazon continues to recalibrate following the COVID-19 pandemic. Prompted by a spike in ecommerce demand, the company massively expanded its logistics network and hired rapidly over 2020-21. But by April of 2022, the company said it had too much capacity in its network. Amazon has since engaged in belt-tightening, including making cuts to certain future-facing tech projects like home delivery robots and to its devices team. This week, Amazon also disclosed that it secured an $8 billion loan, to be used for general expenses this year.
The layoffs come after the company communicated uncertainty about its prospects heading into the recently-completed fourth quarter and the holiday shopping season. While Amazon last week said it had a record holiday shopping season and shared that 60% of items purchased were from third-party sellers, it has yet to release numbers showing overall results.
Amazon is not the only company that provides the tech infrastructure of ecommerce to make layoffs in recent months, as Meta, Shopify and Stripe have also let go of large numbers of employees. But Amazon's planned number of employees is now the highest so far of this wave.
On Wednesday, Salesforce, which provides ecommerce tools to brands and retailers through Commerce Cloud as part of a wider CRM business, said it would lay off 10% of its workforce. That’s about 8,000 employees, the New York Times reports.
“As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that,” CEO Marc Benioff wrote in a memo to employees.
The convergence of inflation, interest rates and consumer shifts back to pre-pandemic preferences for experiences and in-person shopping created a difficult environment for tech companies that saw the biggest rise during pandemic years that saw demand for goods and digital adoption explode like never before. Wednesday’s layoffs are a sign that the fallout will continue in 2023.
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Labor disputes on the West Coast could cause further disruption heading into peak season.
When the first half of 2023 is complete, imports are expected to dip 22% below last year.
That’s according to new data from the Global Port Tracker, which is compiled monthly by the National Retail Federation and Hackett Associates.
The decline has been building over the entire year, as imports dipped in the winter. With the spring, volume started to rebound. In April, the major ports handled 1.78 million Twenty-Foot Equivalent Units. That was an increase of 9.6% from March. Still it was a decline of 21.3% year over year – reflecting the record cargo hauled in over the spike in consumer demand of 2021 and the inventory glut 2022.
In 2023, consumer spending is remaining resilient with in a strong job market, despite the collision of inflation and interest rates. The economy remains different from pre-pandemic days, but shipping volumes are beginning to once again resemble the time before COVID-19.
“Economists and shipping lines increasingly wonder why the decline in container import demand is so much at odds with continuous growth in consumer demand,” said Hackett Associates Founder Ben Hackett, in a statement. “Import container shipments have returned the pre-pandemic levels seen in 2019 and appear likely to stay there for a while.”
Retailers and logistics professionals alike are looking to the second half of the year for a potential upswing. Peak shipping season occurs in the summer, which is in preparation for peak shopping season over the holidays.
Yet disruption could occur on the West Coast if labor issues can’t be settled. This week, ports from Los Angeles to Seattle reported closures and slowdowns as ongoing union disputes boil over, CNBC reported. NRF called on the Biden administration to intervene.
“Cargo volume is lower than last year but retailers are entering the busiest shipping season of the year bringing in holiday merchandise. The last thing retailers and other shippers need is ongoing disruption at the ports,” aid NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “If labor and management can’t reach agreement and operate smoothly and efficiently, retailers will have no choice but to continue to take their cargo to East Coast and Gulf Coast gateways. We continue to urge the administration to step in and help the parties reach an agreement and end the disruptions so operations can return to normal. We’ve had enough unavoidable supply chain issues the past two years. This is not the time for one that can be avoided.”